Response to "Time to review Financial Advisers Act" - The Straits Times, 9 June 2014
18 June 2014
The Editor ST Forum
We refer to the letter “Time to review Financial Advisers Act” by Mr Martin Lee (The Straits Times, 9 June 2014), who asked under what circumstances would a person be considered as a “financial adviser”.
The Financial Advisers Act (FAA) defines “financial adviser” as a person who carries on a business of providing any financial advisory service. In determining if a person is carrying out such a business, MAS takes into account whether opinions or recommendations on investment products are made in a continuous manner.
MAS considers the context and circumstances in assessing if a person is acting as a financial adviser. Persons conducting courses relating to financial literacy or investor education are generally not considered as providing financial advisory services. In addition, the use of teaching aids such as illustrative case studies and trend charts, or the provision of factual information, will not constitute opinions or recommendations on investment products.
However, a person who induces a consumer to invest in a certain investment product under the guise of running a training course will generally be regarded as providing financial advisory services. This is especially so if the person receives compensation, directly or indirectly, as a result of a decision made by a consumer to buy or sell an investment product based on the contents of the course.
Nonetheless, we thank Mr Lee for his suggestion that there should be greater clarity on the definition of financial advice. MAS will consider issuing guidance on the circumstances that could constitute financial advice, taking into account consumer and industry feedback, market developments, and international norms.
Bey Mui Leng (Ms) Director (Communications) Monetary Authority of Singapore